A Brush with Innovation

Stories of U.S.-based low margin commodity manufacturers successfully competing against companies from "low cost" countries always intrigue me. Perhaps because they provide such a stick to poke at high margin companies that claim they can't compete. Those whiny, lazy blokes. An article in The New York Times was the most recent source of such fodder.

Chinese manufacturers long ago wreaked havoc on the U.S. textile,
apparel, toy and electronics industries, but the disruption came slowly
to the brush business. The collapse of the housing market in 2007 and the subsequent recession
turned out to be a boon for China’s brush exports. With far less
construction and far fewer jobs, not as many people needed paintbrushes
(or brooms or toothbrushes). Those who did need them chose cheap imports
over more expensive products made in America.

That’s a familiar story for U. S. manufacturing. The strange thing here
is that there are still more than 200 brush, broom and mop makers in the
U.S. These companies have employed two strategies to stave off Chinese
competition: 1) change everything all the time, or 2) don’t ever change a
thing.

Two models. Reliable perfection and constant innovation. Which do you suppose works best? First there's reliable perfection.

Kirschner hasn’t changed a thing. He makes brushes the very same way,
employing many of the same machines, that his father did 50 years ago.
He told me that he sticks with the old ways because, unlike with toys
and T-shirts, a big chunk of the brush business caters to professionals
who aren’t merely shopping for price but rather for quality. Michael
Wolf, who runs the Greco Brush Company, a supplier to professional house
painters, told me that his customers need to know before each job that
every single bristle on every single brush will be attached properly.
One loose fiber left on a wall can damage a painter’s reputation, which
in turn can hurt Wolf’s too. Wolf said that he can buy brushes for
between a quarter and a dollar cheaper in China, but he is never sure
exactly what he’ll get.

Then there's constant innovation.

At the other end of the business is Lance Cheney, 53, the
fourth-generation president of Braun Brush, who told me that he would
close his company rather than make the same kind of brush, the same way,
for 50 years. He is constantly creating innovative brushes so that he
never has any competition. His clients, he said, now include General Mills (he made a
brush for their cereal-manufacturing line) and the energy industry (a
line of expensive brushes for cleaning pipes in nuclear reactors). He
even developed Brush Tile, fuzzy panels used in artistic wall hangings.
He said his proudest creation is a tiny brush that helped Mars rovers
dust debris from drilling sites. When Cheney sees other firms making one
of his brushes, he often drops the product rather than enter a price
war.

Both companies are still in business, in the U.S., which is something to celebrate in itself. But which is doing better?

Braun Brush [constant innovator] has grown at 15 to 20 percent annually for
the past five years. Kirschner’s don’t-change-a-thing strategy has not brought anything like
this kind of growth. Last year, he says, “was a disaster.” As was this
spring. But June, so far, has been “unbelievably good.”

Constant innovation, or at least change, it is.

Our economy used to be built around Kirschners. Typical factories made
money by reliably producing the same standard suite of products year in,
year out. This provided stability to owners, workers, customers. Very
quickly, though, America has become a nation of Brauns — one in which a
product faces extinction, or a rebooting, shortly after it is unveiled.

This flexible economy has many advantages. It brings a lot more wealth
to those who do it right; over time, it should deliver more economic
growth. But it also destroys much of the stability and predictability to
which Americans had grown accustomed. These days, nearly every
competitor in every field senses that one day, out of the blue, the
entire logic of its economic value will be overturned by events it can’t
foresee or control.

Remember, these are paint brush manufacturers we're talking about. Competing from the U.S. by leveraging speed, agility, innovation, and kaizen. Not encumbered by high labor "costs" or excessive regulation or whatnot.

So explain to me, again, why you can't compete? As my first boss was fond of saying to his "team", "Are you incapable, or just incompetent?"

Comments

Hi Kevin
I agree that innovation is essential to drive growth. But I think Braun Brush gives up a little to easy, and Kirschner could well do better, if they both applied some innovation to their production process. After all as long as a product can more than cover its direct cost to produce it helps to cover the enterprises overhead costs. It is those actual overhead cost that most often kill western companies.
It is a pretty simple fact the more you produce, the wider you can spread your overhead. The big 3 got beaten up because their production volumes went down, while their overhead went up. Reducing production capacity proves that as an enterprise you are very poorly run. You were either dumb and built way to big, or your to dumb to actually put it to use (the auto industry), or you were to dumb to keep it at peak performance (much of the steel industry). There is just no honest intelligent way to have excess capacity.
Productions are not the only innovation that can drive growth and productivity. Take the toy Knex, it is made in the USA, by an injection molding company that will compete on price with the Chinese, much less on quality. They have innovated both their product and processes, giving them the ability to compete with anyone.

I think Roger hits on some great points here. Really, if you combine the two companies here, you would have an unbeatable entity. By combining Greco’s commitment to quality with the innovation of Braun, you would have an unbeatable entity. A constant flow of new, cutting edge products combined with flawless quality for existing products. Imagine both innovation and production both being constantly optimized by continuous improvement. That’s how you compete with low cost manufacturers.